Quick answer
Distributed generation is electricity production at or near its use, from technologies such as solar PV, local wind, fuel cells or combined heat and power; network connection, ownership and customer compensation depend on the project.
Answer: Distributed generation (DG) produces electricity near where it is used, including rooftop solar, local wind, fuel cells and combined heat and power. It may serve on-site loads, connect to a distribution network or operate in an appropriately designed isolated system. Location and electrical connection distinguish DG from centralized supply; they do not automatically determine ownership, export payments, backup capability or customer savings.
What makes generation distributed?
The U.S. EPA’s overview describes technologies generating electricity at or near its use. Examples include rooftop PV, local wind, fuel cells, combustion engines and combined heat and power. DG is not synonymous with renewable generation: fuel choice and operating conditions matter to emissions.
Proximity, network connection and use are more informative than a single universal capacity threshold. A household rooftop, warehouse carport and local shared solar project can have different sizes and ownership structures. A distribution-connected generator can export electricity rather than serving its host’s loads. An off-grid local generator need not have a distribution-network connection.
Distributed energy resources (DER) is a broader category that can include storage and controllable demand. A battery shifts energy and can support system operation, but it is not a primary generating source like a PV array. DOE’s DER resources explain the broader integration and interconnection context.
Common solar DG arrangements
| Arrangement | Key distinction |
|---|---|
| Residential rooftop | Site consumption, export rules and outage behavior need separate analysis |
| Commercial rooftop or carport | Interval loads and demand-charge rules influence customer value |
| Shared/community solar | Subscription eligibility and bill-credit treatment are program-specific |
| Local microgrid | Coordinated sources, loads and controls may support intentional isolated operation |
A behind-the-meter installation and a front-of-meter generator have different energy and settlement boundaries. A community project may supply a distribution network while subscribers receive contractual or tariff credits; their homes do not necessarily receive a dedicated physical supply from that project.
Distributed versus centralized supply
Centralized generators generally supply larger networks, often through transmission infrastructure. DG can serve demand locally and change distribution power flows. Neither description fixes build time, retail versus wholesale settlement, permitting complexity or system resilience. Large local projects can still need substantial studies and upgrades.
Local generation can reduce delivery losses under suitable conditions, but the effect depends on feeder loads and power flows. Do not automatically add an assumed transmission-loss percentage to a customer’s savings: retail billing and export compensation already have defined settlement rules, and a network benefit is not necessarily a separate payment to the owner.
Calculate customer value at the meter
Start with the customer’s actual tariff and time-aligned generation/load profile. Distinguish self-consumption from exports, then evaluate demand charges and any separately contracted services. Include capital cost, financing, maintenance, replacements and applicable fees in a complete economic assessment.
Hypothetical single-hour example: PV generates 10 kWh while the site uses 7 kWh, with no storage and compatible interval timing. Self-consumption is 7 kWh and export is 3 kWh. At an assumed avoided variable energy rate of $0.20/kWh and export rate of $0.05/kWh, the interval energy value is 7 × 0.20 + 3 × 0.05 = $1.55. These are illustrative rates, not a current tariff or total project profit.
Crediting all 10 kWh at $0.20 would incorrectly produce $2.00 under these assumptions. Demand-charge savings require checking the tariff’s billing intervals, peak windows and ratchets; annual PV energy alone does not establish them. Fixed fees may remain even when purchased energy falls.
Net metering and net billing are jurisdiction- and tariff-specific. DG can operate without net metering where permitted, but economic viability still needs analysis. Grid-service revenue requires eligibility, an agreement and verified performance, rather than simply owning a capable inverter or battery.
Interconnection and outage planning
Keep the useful site-design workflow: assess shading and usable area, review roof/structural constraints, model generation, obtain interval consumption and identify applicable utility requirements early. Record export limits, metering, protection settings, studies and potential upgrade responsibilities.
Hosting-capacity information can support screening but is not project approval. DOE’s hosting-capacity map overview explicitly distinguishes network-level information from site-specific interconnection questions. Confirm map date and assumptions with the utility.
Voltage rise, reverse flow and protection coordination are relevant network concerns. Grid-support functions and settings depend on the equipment and applicable connection rules. Ordinary grid-following solar generally cannot supply an isolated building during an outage. Backup requires a compatible system with appropriate transfer/isolation, controls, protection and an adequate source for the intended loads. A battery alone does not establish whole-building backup.
Common questions
Is DG always rooftop solar?
No. It includes several electricity-generating technologies near loads, including non-renewable equipment.
Does DG mean diesel generator on an electricity bill?
The abbreviation can have different meanings in billing or facility documents. Check the issuer’s terminology; a DG charge is not automatically a solar-generation charge.
Does distributed solar work during a grid outage?
Only an appropriately configured system can serve isolated loads. The presence of local panels does not establish backup capability.
Does DG always receive net-metering credits?
No. Export permission and payment depend on the specific utility, tariff, program and jurisdiction.
Related Glossary Terms
About the Contributors
Co-Founder · SurgePV
Akash Hirpara is identified by SurgePV as a company co-founder. His SurgePV author page lists only role information that can be tied to the public profile below; education, certifications, project totals, financial results, speaking engagements, and media appearances are not asserted without retained evidence.
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